Arden Arcade, CA Chapter 13 Bankruptcy Attorney
When a friend or family member suggests filing for bankruptcy, your initial reaction will probably be based on a misunderstanding of what bankruptcy entails. For many people, especially those with a regular income, a Chapter 13 bankruptcy is often the fastest way to deal with a substantial amount of debt. Additionally, if you are facing a foreclosure or car repossession, Chapter 13 might be your only option to keep your property.
Our experienced Arden Arcade, CA Chapter 13 bankruptcy attorneys at The Bankruptcy Group are sympathetic to the fears and misconceptions people have. We strive to not only make filing for bankruptcy as easy as possible but also want our clients to understand the process. If your financial situation is not where you want it to be, contact our office at 1-800-920-5351 to discuss your bankruptcy options.
Chapter 13 Bankruptcy in Arden Arcade
Many residents of Arden Arcade want to ease the burden they feel because of financial stress. One option available is filing for bankruptcy. While most people who think about bankruptcy imagine Chapter 7, those who do not qualify or have situations where a Chapter 7 is not beneficial are usually able to file for Chapter 13.
A Chapter 13 bankruptcy is often called a “wage earners” bankruptcy. This is because, unlike Chapter 7, a debtor who files for Chapter 13 will be required to make a monthly payment for three to five years, depending on their income and circumstances. This reorganization plan will be used to pay down a portion or all the petitioner’s debt. While a petitioner will not be required to work with each creditor individually, their plan must comply with the Bankruptcy Code and be approved by the court. Having a pragmatic Arden Arcade bankruptcy attorney working with you will help ensure that your plan adheres to the necessary requirements.
Benefits of Filing for Chapter 13 in Arden Arcade, CA
While some people file for Chapter 13 because they do not qualify for Chapter 7, others choose Chapter 13 because of the added advantages it offers.
One of the most significant advantages Chapter 13 has over Chapter 7 is that it allows a person or family facing a foreclosure on their home to save their property. While Chapter 7 could slow the process down, there is no mechanism to protect a foreclosed property from sheriff sale.
In Chapter 13, a homeowner can stop a pending sheriff sale and pay the money they are behind. In many cases, by discharging other unsecured debt through Chapter 13, a petitioner can manage both their monthly mortgage payment and the required bankruptcy payment.
Vehicle Payments in Chapter 13
If your car is about to be repossessed, Chapter 13 will stop the repossession. Similar to a mortgage, a petitioner can pay any money they are behind on their car payment through their bankruptcy plan. In some cases, if a debtor acts quickly enough, a car that was repossessed could be recovered before it is sold at auction. While not always possible, you should contact our Arden Arcade bankruptcy attorney if your car was repossessed.
Chapter 13 debtors are also sometimes able to cramdown their auto payments. When you drive a car off the lot, it immediately depreciates. It is not uncommon, especially if you have a very disadvantageous interest rate, that you owe much more on your vehicle than it is worth. Under certain circumstances, a Chapter 13 petitioner can lower their total car payment to the vehicle’s fair market value. If you are filing for bankruptcy, our experienced California bankruptcy lawyer will thoroughly review your car loan to see if you are eligible for this added benefit.
Taxes and Other Non-Dischargeable Debts
Some debts are not dischargeable in either Chapter 7 or Chapter 13. These debts will survive Chapter 7 and the petitioner will have to deal with them after their bankruptcy is over. However, many of these debts could be paid through Chapter 13. In the case of tax debt, only a portion of the total debt is classified as a priority debt. This classification is important because priority debt must be paid through a Chapter 13 plan. Therefore, it is possible to discharge any tax debt that is classified as unsecured.
Qualifying for Chapter 13 in Arden Arcade, California
Qualifying for Chapter 13 is usually easier than qualifying for Chapter 7. Before you can file for bankruptcy, our knowledgeable Arden Arcade bankruptcy attorney will use your income information to calculate the “means test.” The means test is used to calculate your average monthly disposable income. If your income is above a certain threshold, based on location and household size, you will not be eligible to file for Chapter 7. However, most people who do not qualify for Chapter 7 will be eligible for Chapter 13.
There are still a few criteria a Chapter 13 petitioner must meet. The first is that you have a regular income source that is sufficient to pay for your ordinary monthly expenses and your monthly bankruptcy plan payment. Income can come from a variety of sources in Chapter 13. The most common source is a person’s salary. All salaries in the household will be counted. Therefore, if you have a spouse who also works, their income will be added to yours. Additionally, income could come from unemployment, social security, and even contributions from friends or other family members.
You are also not eligible to file for Chapter 13 in Arden Arcade if your total liquidated and non-contingent debts exceed the limits in the Bankruptcy Code. These limits are increased every three years. As of April 1, 2019, a petitioner’s secured debts cannot be more than $1,257,850 and their unsecured debt cannot exceed $419,275.
Call Our Arden Arcade, CA Chapter 13 Bankruptcy Attorney for a Free Consultation
People who are swimming in debt or fear losing their homes to foreclosure have options. Filing for Chapter 13 bankruptcy could be the first step in re-establishing a strong financial foundation. Our Arden Arcade, CA chapter 13 bankruptcy is available to answer any questions you have about Chapter 13, Chapter 7, or bankruptcy in general. To schedule a free, confidential consultation, call The Bankruptcy Group at 1-800-920-535.